Why CEO Pay Is Justified
Chief Executive Officer is the most sought-after job in the business community. For many, it represents the top end of the career ladder. But with power and prestige comes tremendous responsibility. A CEO is tasked with the high-pressure job of setting strategy for the company, modeling the company’s culture, forming and directing a team of senior executives, and allocating resources throughout the organisation. Being ultimately responsible for the success or failure of the company, a CEO cannot make mistakes without impacting every employee and investor in the organisation.
Contrary to what you might think, most CEOs at large corporations have relatively little power, and instead, act as figureheads and spokespeople for the board of directors. At startups and smaller private businesses, however, the CEO often has tremendous influence. In any case, every CEO must be available 24/7 to respond to the endless exigencies of running a business. From hiring personnel to entertaining clients to developing strategy for responding to market fluctuations, the day-to-day job of a chief executive officer is fast paced and constantly demanding.
Of course, it also comes with many benefits. Two advantages stand out above the rest: The power to define business and lead a team in accomplishing its goals is no doubt the biggest reward of being a CEO. The second biggest benefit is the money.
The Salary of a CEO
In the UK, CEOs are amongst the top earners in the workforce but because there is a vast range of companies, from tiny startups to massive, publicly traded corporations, the range of salaries is remarkably diverse. While the median salary for CEOs in Britain is £99,500, annual pay ranges from a mere £49,000 to about £226,000. Bonuses can run up to £75,000 per year while top earners can bring in up to an additional £50,000 from profit sharing and up to £57,000 in commission.
Unlike many other positions, where salaries are fixed, and workers know what to expect each year, CEO salaries are subject to a great deal of fluctuations depending on the successes or struggles of the business, and annual income can vary widely from year to year.
CEO Skills That Influence Income
As the heads of their companies, CEOs can influence their income much more directly than most other employees within an organisation. With no boss above them to whom they must prove themselves, the new skills of a CEO translate much more directly into higher pay. The skills listed below are the leading influencers of annual salary for CEOs in the UK today.
- Team Leadership: Creating a cohesive, motivated, and talented team is vital to the success of every business, but it is difficult to manage people and create a company culture of openness, loyalty, and cooperation. So a CEO who excels in leadership is essential to a company’s success.
- To improve this skill, CEO’s can attend seminars and business classes or read books by thought-leaders. But ultimately, the experience is the best teacher. It takes a long time to become a good CEO.
- Strategic Planning: Business is competition. So companies only excel when they manage to out-maneuver their competitors, enter the right markets, sell to the right customers, and allocate resources in the wisest possible ways. All this requires a tremendous amount of business knowledge and keen instincts for predicting the market.
- CEOs can hone their strategic planning abilities by becoming experts in PEST (political, economic, social and technological) analysis and SWOT analysis, which addresses the organisation’s internal processes in relation to external threats.
- Business Development: The goal of business development is to make a company grow this means tapping new markets, expanding production, building new facilities, hiring personnel, and connecting with new suppliers and buyers.
- One of the leading ways to enhance business development aptitude is to cultivate relationship management skills. Ultimately, expanding a business means making new connections with other companies and investors who can help the business grow.
- Marketing Management: Marketing is how businesses connect with buyers. Without an effective marketing campaign, product or service is doomed to fail.
- Today, the best way to enhance marketing management skills is to become an expert in the latest marketing technology: social media. Mastering digital marketing and building a marketing team that excels in new media is vital to growing business in the 21st century.
So, are the high salaries of a CEO justified? At the vast majority of companies, the answer is yes. To fulfill the role of CEO requires a constant dedication to the business. There is no quitting time for the head of the company, who must be available every hour of the day by phone and email. To perform the senior executive job well, a CEO must be dedicated to steadily improving skills, learning about new markets, exploring new strategies, and researching the competition. Every business needs a leader, and that person needs to have a strong incentive to excel in their job. So a highly paid and highly motivated CEO is ultimately beneficial to every member of the company.